Bullfrog AI Holdings, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. The company develops AI/ML tools for medicine and drug development, centered on its bfLEAP platform, and is pursuing biopharma services, partnerships, and licensed drug programs. Figures are unaudited.
Financial performance and position
- Revenue: $0 in Q1 2023 and Q1 2022, despite management’s statement that it began generating service revenue in late 2022. No cost of goods sold or gross profit was reported.
- Expenses and loss: Operating expenses were $1.191 million, up $640,394 from $550,251 a year earlier. R&D was $369,933; general and administrative expense was $820,712. Net loss was $1.326 million, versus $566,359; basic and diluted loss per share was $0.27 versus $0.12.
- Cash flow: Operating cash use was $2.361 million, compared with $9,775 in the prior-year quarter. Financing provided $7.723 million, primarily reflecting the IPO; investing cash flow was zero. Cash increased by $5.362 million.
- Liquidity: Cash was $5.420 million at March 31, versus $57,670 at December 31, 2022. Current assets were $6.226 million and current liabilities $1.609 million, implying working capital of about $4.617 million and a current ratio of about 3.9.
- Debt and equity: Convertible notes and related-party convertible notes shown at year-end were no longer outstanding at March 31, largely following IPO-related conversions and repayments. Current liabilities included $629,486 of short-term insurance financing. Stockholders’ equity was $4.624 million, compared with a $3.057 million deficit at year-end.
Changes versus the prior comparable period
- Net loss increased by $759,188, with higher operating expenses and interest expense, plus a $92,959 loss on conversion of notes. Other income included $18,338, mainly interest earned on IPO proceeds.
- The February 2023 IPO sold 1,297,318 units at $6.50 each for about $8.4 million gross proceeds; net proceeds reported in equity and cash flows were about $7.294 million. The unit offering included common shares and two warrants per unit.
- Common shares outstanding rose from 4,021,935 at December 31, 2022 to 5,658,111 at March 31, 2023. The company also completed a 1-for-7 reverse stock split in February; share and per-share figures were retroactively adjusted.
Outlook, risks, and notable items
- Management said IPO funds, converted debt, and subsequent warrant exercises supported planned operations for substantially longer than 12 months from the filing date, including in the absence of 2023 revenue. In April, holders exercised 436,533 warrants for approximately $1.495 million in proceeds.
- Management expects to spend approximately $2.1 million over the next 24 months on service offerings, preclinical IND-enabling work, and R&D for potential clinical trials. It anticipates higher R&D and public-company costs; no revenue or profitability guidance was provided.
- Execution depends on gaining customers and partners, developing the bfLEAP platform, and securing partners and third-party services for drug development and clinical trials. Licensed programs carry royalties, minimum payments, and potential milestone or sublicense obligations.
- The company has operated at a loss with negative operating cash flow since inception. Its stated runway depends on available capital and planned spending; future financing availability and revenue generation remain risks.
- The filing says the company is transitioning its accounting and financial reporting systems to support public-company controls. It reports no material changes in internal control over financial reporting during the quarter but does not provide a clear affirmative conclusion on the effectiveness of disclosure controls.
- No legal proceedings were reported. The cover page indicates “No” to having filed all required reports during the preceding 12 months; investors may wish to check the company’s filing history.
Key facts for investors to verify
- Whether and when service revenue begins, given zero Q1 revenue despite prior service activity and contracts with two organizations.
- Cash burn, timing and conditions of management’s runway estimate, and the status of April warrant proceeds.
- Planned R&D spending, clinical and preclinical milestones, partnership progress, and funding needs.
- Potential dilution: 4,232,680 warrants were outstanding at March 31, alongside 253,717 stock options; compare with subsequent share-count disclosures.
- Required-report filing status and progress in establishing public-company financial reporting and disclosure controls.